Nio (NIO 0.66%) and Rivian Automotive (RIVN +1.83%) were once two of the market's hottest electric vehicle (EV) stocks. Nio, the Chinese EV maker, which went public at $6.26 per American depositary receipt (ADR) on Sept. 12, 2018, surged tenfold to a record closing price of $62.84 on Feb. 9, 2021. Rivian, an American maker of electric pickups, SUVs, and vans, went public at $78 on Nov. 10, 2021. Its stock more than doubled to its highest closing price of $172.01 a week later.
But today, Nio and Rivian trade at roughly $4 and $12, respectively. Both stocks plunged as they delivered fewer vehicles from year to year and racked up steep losses along the way. So should investors buy either of these out-of-favor EV stocks as a contrarian play?
Image source: Getty Images.
Nio's business is warming up again
Nio produces a wide range of electric sedans and SUVs in China, and it's been gradually expanding into Europe. It differentiates itself from its competitors with removable batteries, which can be quickly swapped out at its own stations instead of being slowly charged at traditional stalls.
Nio delivered its first vehicles in 2018, and its annual deliveries soared nearly tenfold from 2019 to 2024. However, its growth decelerated in 2022 and 2023 as it grappled with supply chain issues, intense competition, and China's slowing economic growth. Its vehicle margin (its revenue from new vehicle sales minus cost of sales) also plunged from 2021 to 2023.
|
Metric |
2019 |
2020 |
2021 |
2022 |
2023 |
2024 |
|---|---|---|---|---|---|---|
|
Nio deliveries |
20,565 |
43,728 |
91,429 |
122,486 |
160,038 |
221,970 |
|
Deliveries growth |
81% |
113% |
109% |
34% |
31% |
39% |
|
Vehicle margin |
(9.9%) |
12.7% |
20.1% |
13.7% |
9.5% |
12.3% |
Data source: Nio.
But in 2024, Nio's deliveries accelerated again as its vehicle margin expanded. That recovery was driven by its robust sales of ET sedans, ES SUVs, and EC crossovers, as well as its recent launch of its lower-end Onvo L60 -- which resembles Tesla's Model Y but starts at just 149,900 yuan ($20,542).
Nio also continued to expand across Europe in the shadow of higher tariffs. Lower material costs and higher sales of premium vehicles (including its ET7 Executive Edition sedan) offset its lower average selling prices and stabilized its vehicle margins.
The company still has plenty of irons in the fire. It recently launched the Firefly, a compact electric hatchback aimed at smaller vehicles like BMW's Mini, which starts at just 148,800 yuan ($20,404) in China. It plans to launch the Firefly in Europe later this year, and it could shift some of its manufacturing to the European Union to counter the region's tariffs.
NYSE: NIO
Key Data Points
Analysts expect Nio's revenue to rise 38% in 2025 and 32% in 2026, but it's expected to stay unprofitable. Yet with an enterprise value of $9.4 billion, it still looks dirt cheap at a price-to-sales ratio of less than 1.
Rivian expects the R2 to revive its business
In 2021, Rivian started delivering its first R1T pickup and custom electric delivery vans (EDVs) for its top investor, Amazon. It launched its R1S SUV in 2022.
Before it went public, it claimed it could produce 50,000 vehicles in 2022 -- but it got off to a slower-than-expected start as it struggled with supply chain issues, tough competition, macro headwinds, and a cooling EV market. Its gross margin also stayed negative as it struggled to ramp up its production.
|
Metric |
2021 |
2022 |
2023 |
2024 |
|---|---|---|---|---|
|
Rivian deliveries |
920 |
20,332 |
50,122 |
51,759 |
|
Deliveries growth |
N/A |
2,110% |
147% |
3% |
|
Gross margin |
(845.5%) |
(188.4%) |
(45.8%) |
(24.1%) |
Data source: Rivian.
Rivian's deliveries more than doubled in 2023 as it resolved its initial supply chain issues and used more first-party components. But in 2024, its production stalled out and its deliveries barely grew as it temporarily shut down its main plant in Illinois for some technological upgrades and dealt with more supply chain problems.
For 2025, it only expects to deliver 46,000 to 51,000 vehicles as it shuts down its Illinois plant again to get ready for the launch of its cheaper R2 SUV in 2026, deals with the aftermath of the Los Angeles fires, grapples with more component shortages, and navigates the Trump administration's potential changes to federal incentives and tariffs.
But in 2023 and 2024, Rivian's gross margin still improved as it reduced its manufacturing costs, expanded its higher-margin software and services segment, and sold more of its regulatory credits to other automakers. It expects those tailwinds to help it post a "modest" gross profit in 2025, but it won't turn profitable anytime soon.
NASDAQ: RIVN
Key Data Points
Analysts expect Rivian's revenue to only rise 8% in 2025, but they anticipate 40% growth in 2026 as it rolls out the R2 (which should start at $45,000). With an enterprise value of $11.8 billion, it still looks like a bargain at 2 times this year's sales.
The better buy: Nio
Nio and Rivian are both risky and speculative stocks. But if I had to choose one over the other, I'd pick Nio because it's delivering more vehicles, has clearer plans for the future, and is trading at lower valuations. Rivian might eventually bounce back, but I'd wait to see how its R2 launch goes before betting on its long-term turnaround.
